AMA 2011 Insurer Report Card

According to the AMA’s latest findings, commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of two percent compared to last year. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year, and added an estimated $1.5 billion in unnecessary administrative costs to the health system. The AMA estimates that eliminating health insurer claim payment errors would save $17 billion.

Physicians received no payment at all from commercial health insurers on nearly 23 percent of claims they submitted. There are many reasons a legitimate claim may go unpaid by an insurer. Claims may be denied, edited or deferred to patients. During Feb. and March of this year, the most common reason insurers didn’t issue a payment was due to deductible requirements that shift payment responsibility to patients until a dollar limit is exceeded.

Metric 6: First ERA accuracy:

This metric measured the percentage of claim lines where the payer's allowed amount was equal to the physician practice's expected allowed amount. For this metric, it was necessary to obtain the actual contracted allowed amounts (i.e., fee schedule) for each claim line.

Comment:

By Don McCanne, MD

The private health insurance industry's primary product that they are selling us is administrative services. How well are they doing? One-fifth of the claims that they process are in error. Medicare does better, but in using private billing contractors, their claims are still incorrect 4 percent of the time. We're sure paying a lot to an industry that is doing such a lousy job.

Another finding that is buried in this report is that physicians received no payment at all from commercial health insurers on nearly 23 percent of claims they submitted. Think of the amount of administrative hassle involved here that is producing... nothing! The supposedly legitimate reasons for nonpayment include failure to meet the deductible, insurance policy has been cancelled, employer changed health plans, failure to use a network physician, services are not an included benefit, etc.

Under our current dysfunctional system of financing health care such denied claims are expected, as is the administrative waste entailed. But think of how it would be under a single payer system. None of these would be reasons to deny a claim. With everyone covered under one set of single payer rules, claims payment rate would be close to 100 percent.

Our current health care financing system is highly flawed, and the commercial insurers are incompetent. And we want more of this?!